Which statement about incentive clauses is false?

Incentive clauses are designed to encourage specific behaviors or outcomes, particularly in the context of property management and leases. The statement that must be punitive to be effective is false because the effectiveness of incentive clauses does not rely solely on punishments or penalties. Instead, effective incentive clauses often focus on positive reinforcement, encouraging desired outcomes such as cost reductions or improved performance.

Incentive clauses can be structured around various metrics, such as a reduction in operating expenses or targeting specific problems with the property. By linking the incentives to positive outcomes, property managers can foster collaboration and motivate stakeholders to achieve common goals. Additionally, including training expenses and reimbursable clauses within these agreements is a common practice to ensure that all parties understand the responsibilities and expectations tied to the incentives. Thus, the core of an effective incentive structure is constructive motivation rather than punitive measures.